Civil Service Agencies (Hansard, 25 July 1988)

76. Mr. Robert G. Hughes
To ask the Minister for the Civil Service what progress has been made in setting up the new Civil Service agencies.

§ The Minister of State, Privy Council Office (Mr. Richard Luce)
As I told my hon. Friend the Member for Wokingham (Mr. Redwood) earlier today, we have now identified 29 activities, covering some 170,000 civil servants, which are immediate agency candidates. One of these was, as my right hon. Friend the Secretary of State for Transport, told the House earlier today, the vehicle inspectorate, which will be established as an agency from 1 August. The project manager is examining with Departments the rest of their activities, and I hope to make a report to the House later this year.

Mr. Hughes
Does my right hon. Friend accept that his statement will be very welcome to those of us who believe that these measures will improve the delivery of service in many areas, particularly the areas that have been announced today? Will he confirm that it is important that those services should be free to act in a commercial sense and that he should get on with the process as quickly as possible? When does he hope to be able to announce further services that will be put out in that way?

§ Mr. Luce
I am most grateful to my hon. Friend. Of course, the whole purpose of the exercise in devolution of responsibility within the Civil Service for the executive functions is to improve the delivery of Government services, to improve management still further than the already high standards and to get the best value for money. That can best be achieved by this objective. My hon. Friend will see that the framework agreement for the vehicle inspectorate is extremely thorough and very long and highlights a number of areas where there is substantial devolution of authority. That is very important indeed.
On the latter part of my hon. Friend's question, I can assure him that we are intending to make as rapid progress as we can. I have now identified three other areas which we expect to become agencies soon—the Companies Registration Office, the DHSS resettlement units and the employment services.

§ Mr. John Garrett (Norwich, South)
Will the Minister confirm that his officials are saying that up to three quarters of the entire Civil Service will be subjected to the agency arrangements, including DHSS local offices? How is he responding to the misgivings of the Treasury, publicly expressed, about the different pay rates for different agencies, and the misgivings of many hon. Members that under agency arrangements we shall no longer be able to call civil servants to account, particularly for some sensitive areas of public policy, such as the social fund?

§ Mr. Luce
The hon. Gentleman poses a number of questions. First, the project manager did state in evidence to the Treasury and Civil Service Select Committee that he felt that within 10 years at least three quarters of the Civil Service could have agency status established. I see no reason to quarrel with that figure. On the hon. Gentleman's second question, the DHSS, at the request of 22 my right hon. Friend the Secretary of State for Social Services, is being examined as a possible candidate for agency status. Thirdly, the hon. Gentleman will know that, through my right hon. Friend the Chancellor of the Exchequer, we are already developing a more flexible pay policy on recruitment and retention grounds. That is already evolving, irrespective of the agencies. The vehicle inspectorate document, which is fully published, shows that there is considerable devolution of responsibility. On accountability, at the end of the day the Ministers concerned are accountable to the House and that principle must remain firmly established.

§ Mr. Terence Higgins (Worthing)
Is my right hon. Friend aware that the Treasury and Civil Service Select Committee has now taken a great deal of evidence on the subject and hopes to report soon? Clearly, I cannot anticipate what the report may say. On a personal basis, may I say that the selection of the vehicle inspectorate as an example seems to be an appropriate one.

§ Mr. Luce
I am grateful to my right hon. Friend. When he publishes the report by the Treasury and Civil Service Select Committee, I can assure him that I and my right hon. Friends will study the findings carefully.

§ Mr. Giles Radice (Durham, North)
Is it not the case that if there is to be such a dramatic change by the end of 10 years, it will have profound implications for democratic and parliamentary accountability, particularly for the role of Ministers, Members of Parliament, Select Committees and the Public Accounts Committee?

§ Mr. Luce
I know that the hon. Gentleman is taking a close interest in the matter in his role as a member of the Select Committee. I must strongly reiterate that Ministers will remain ultimately accountable. The nature of the responsibility between the Secretary of State for broad policy matters and the chief executive for day-to-day management matters has to be spelt out clearly in the framework document. That is clear in the document available for the vehicle inspectorate. At the end of the day, Ministers are accountable but it is open to Select Committees to invite the chief executive and other officials to give evidence to them.

§ Mr. Michael Heseltine (Henley)
I welcome my right hon. Friend's statement, but does he agree that the heart of enhanced responsibility in the management of such agencies is that the managers should be recruited from the public and private sectors, that they should be recruited on contract and not on life terms and that, as long as the Treasury has control over the pay and conditions of the employees of the agencies, the concept of responsibility at which my right hon. Friend is driving still has a long way to go?

§ Mr. Luce
I respect my right hon. Friend's view, since he has had considerable experience in the subject and did a great deal during his time in office to help improve the management and resources of the Civil Service. I can confirm that, on the recruitment of chief executives and other officials, it is open to Secretaries of State in charge of the particular agency to recruit from outside the Civil Service if they so wish. If they think that it is more efficient that way they are entitled to do so, provided that there is fair and open competition. I agree entirely with my right hon. Friend that there are definitely advantages in having 23 fixed contracts in certain circumstances. That is what has happened for the vehicle inspectorate, where there is a three-year contract.
As for the Treasury and my right hon. Friend the Chancellor, if my right hon. Friend looks at the framework agreement for the vehicle inspectorate, he will see the extent of devolution of responsibility that has already been provided for the management of personnel, for resources and for the giving of performance-related pay, which is extremely important. It must be in the interests of the Treasury as well as that of the Government to obtain better value for money. That is the point of the agency process. It is in all our interests that it should succeed.

§ Mr. Robert Sheldon (Ashton-under-Lyne)
All hon. Members will agree that we want value for money in all respects in these matters. Will the right hon. Gentleman accept that accountability to Parliament is the crucial test? The Prime Minister said that the agencies will be accountable to Parliament. The right hon. Gentleman's comments seem to have gone a little astray from the Prime Minister's remarks. Will he give a further assurance that accountability to the Public Accounts Committee, to the National Audit Office and to the Comptroller and Auditor General will remain unchanged?

§ Mr. Luce
I can give that assurance to the right hon. Gentleman without any equivocation. There is no doubt about it.

§ Sir Peter Blaker (Blackpool, South)
Will the agencies have power to relocate staff outside London and the south-east of England, in so far as they are not already relocated, if relocation is considered desirable to save costs, for example?

§ Mr. Luce
I know of my right hon. Friend's interest in the matter. He may have noticed that my right hon. Friend the Paymaster General recently made a statement about the relocation of the Civil Service. Four out of five civil servants are already outside London. In terms of recruitment and retention, if Departments find it more beneficial to move civil servants to other regions, they will look seriously at the matter, and it should be regarded as a high priority.

§ Mr. Harry Barnes (Derbyshire, North-East)
Have there been full, free and frank discussions with the relevant Civil Service trade unions about this agency in the vehicle inspectorate? The matter should be discussed with the three other agencies that were referred to, and the 25 agencies that will follow.

§ Mr. Luce
I can give the hon. Gentleman an assurance that, in any case, if there is to be a suggested change in the terms and conditions of the Civil Service, there will be full and proper consultations with the Civil Service. The hon. Gentleman might like to know that, last Friday, the project manager for the next steps, Mr. Kemp, saw the trade unions to consult them about the next stages.

§ Mr. Nicholas Soames (Crawley)
Does my right hon. Friend agree that, as in the rest of the Civil Service, many benefits would accrue to the agencies were there to be a great more fluency in the coming and going between the public and private sectors? As my right hon. Friend has 24 already given an assurance in respect of new agencies, will he seek broadly throughout the Civil Service to have many more civil servants having experience in the private sector and vice versa?

§ Mr. Luce
My hon. Friend is absolutely right. We are looking at ways in which we can strengthen the interchange between the private sector and the Civil Service, not just by secondments but by other means. The establishment of these agencies will do quite a lot to strengthen that process. As I said earlier, we certainly will not exclude the possibility of chief executives being part of that process.

§ Mr. Max Madden (Bradford, West)
Will the Minister confirm that he does not propose full privatisation but an agency because of opposition to privatisation from the road haulage industry? Will he confirm that all trade unions representing the appropriate staff have been fully consulted? Are we to take it that "a more flexible pay policy" is a euphemism for the ending of nationally agreed pay rates?

§ Mr. Luce
The Governmenfs policy on privatisation has not changed as a result of the "next steps" policy. If a Minister decides that a particular function of his Department would be better carried out by means of privatisation, that must be his first priority. It is only when that is decided as not being the best process and the best next stage that an agency may be decided upon as the best move to strengthen the management of services. I simply reiterate that we have undertaken to consult trade unions whenever there are any proposed changes in terms and conditions. The project manager saw trade union leaders last Friday to talk about the next stages.

§ Mr. Peter Thurnham (Bolton, North-East)
Does my right hon. Friend agree that service to the public should be much improved if the Companies Registration Office were put on an agency basis? Is he aware of the long delays at present? On average they are 10 weeks, and, in the case of some Barlow Clowes documents, over 200 days.

§ Mr. Luce
It will be for my right hon. Friend the Secretary of State for Trade and Industry in due course to announce the timing, if he eventually decides to establish an agency, and how he envisages an improvement in services. My hon. Friend is right to stress the importance of the improved delivery of services. That is one of the major objectives of this exercise. It is interesting that, earlier today, my right hon. Friend the Secretary of State for Transport highlighted some examples of how the services of the vehicle inspectorate can be improved.

§ Dr. John Marek (Wrexham)
Will the Minister confirm that standards of testing will be maintained in the long term, following the setting up of the agency? Secondly, will he confirm that the road haulage industry opposed privatisation due to escalating costs and therefore that the agency is not a first step towards privatisation? What guarantees can the Minister give staff wishing to transfer to or from the agency in the future? Finally, when the Minster refers to flexible pay, many of us assume that he means lower pay for people in the north, Scotland and Wales. Can he deny that?

§ Mr. Luce
The first two questions are principally for my right hon. Friend the Secretary of State for Transport, but my right hon. Friend is happy for me to stress that, with 25 regard to the vehicle inspectorate, the safety interest will remain paramount. It is important to confirm that. I also confirm that my right hon. Friend has no plans whatever to take the matter a stage further to privatisation. His first and immediate priority is the establishment of an agency.